Giles Coghlan LLB, Lth, MA
Financial Source
The market communicates its mood not only through price but also through volume. This is one message that you really need to pay attention to as volume is a confirmation or a contradiction of price, particularly at certain times.
The message of high volume
The best way to understand high volume is to think of high volume like SOMEONE IS SHOUTING. High volume is like using CAPS LOCK when you are typing. The simple relationship between price and volume is like this:
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Rising price, rising volume = Increasing demand (bullish).
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Rising price, falling volume = Decreasing demand (bearish).
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Falling price, rising volume = Increasing supply (bearish).
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Falling price, falling volume = Decreasing supply (bullish).
How to view volume?
There are many different ways to view volume on a chart, but one of the simplest ways is to just have volume displayed under the price. The interpretation of price is then complimented by volume. Is volume rising or falling with the price? Is this breakout supported with high volume? Remember, volume validates price and a big fundamental shift in the markets accompanied by high volume is a huge vote of confidence. So, if you have not been consulting volume when trading stocks you have been missing out on a key piece of analysis. If you look at the chart below you can see the volume plotted underneath the price.
There are other ways to have volume displayed like using volume profile (very useful) and equivolume charts, but if you have not looked at volume before the simplest way is to look at the example seen here and start with that.
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Editors’ Picks
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
GBP/USD trades on a softer note below 1.2530 ahead of US PCE data
GBP/USD trades on a weaker note around 1.2502 during the early Asian trading hours on Friday. The modest rebound of the US Dollar weighs on the major pair despite weaker US GDP growth numbers. The US Personal Consumption Expenditures Price Index data on Friday will be in the spotlight.
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
Editors’ Picks
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
FBI cautions against non-KYC Bitcoin and crypto money transmitting services as SEC goes after MetaMask
US FBI has issued a caution to Bitcoiners and cryptocurrency market enthusiasts, coming on the same day as when the US Securities and Exchange Commission is on the receiving end of a lawsuit, with a new player adding to the list of parties calling for the regulator to restrain its hand.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.
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